Maintenance Expenses of a Company Are to Be Analyzed for Purposes

question 70

Multiple Choice

Maintenance expenses of a company are to be analyzed for purposes of constructing a flexible budget. Examination of past records disclosed the following costs and volume measures: $\begin{array}{lrr} & \text { Highest } & \text { Lowest } \\\text { Cost per month } & \$ 42,000 & \$ 34,000 \\\text { Machine hours } & 46,000 & 30,000\end{array}$ Using the high-low method, the estimated variable cost per machine hour is:

• A) $0.70
• B) $0.60
• C) $0.50
• D) $0.90
• E) $0.10

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Definitions:

Units Produced

The total number of units of product completed by a company during a given period.

Direct Manufacturing Cost

Costs that are directly associated with the production of goods, including direct materials used and direct labor.

Units Produced

The total number of completed products manufactured within a specified period.

Manufacturing Overhead Cost

These are indirect factory-related costs that are incurred when a product is manufactured, including costs related to the operation and maintenance of the factory.